The Arizona Health Care Cost Containment System (AHCCCS), Arizona’s Medicaid program, is “a public-private model in which health plans are paid a set monthly fee and are expected to care for all of a patient’s needs,” according to an article by Sarah Varney in Kaiser Health News (KHN). Arizona “is occupying an unusual place in the national landscape: as a model for how a generously funded tightly regulated government program can aid vulnerable, low-income patients,” Varney reported. Since its inception the state’s conservative lawmakers and governors have strongly supported Arizona’s public-private model, Varney noted.

For over two decades, state health officials have aggressively applied managed care strictures, Varney said. Although Arizona was the last state to join Medicaid in 1982, early on, it adopted private health plans to manage care for beneficiaries because Arizona’s system of providing basic medical service to its most impoverished residents was in disarray. Under AHCCCS, health plans compete for Arizona’s combined Medicare-Medicaid patients and must use the monthly capitated fee to cover all the patient’s needs. AHCCS has 75 staff members who oversee the health plans and make sure they are meeting requirements, which include quarterly reports on access to medical care, quality measures, and proof that patients are getting needed services such as attendant care. AHCCCS meets with health plans on a quarterly basis and looks at their performance. Health plan executives, hospital and provider groups, and case managers report that state regulators are strict, vigilant, and quick to rebuke health plans that don’t meet their standards.

According to Varney, today only 27 percent of Arizonans covered by Medicare and Medicaid and deemed sick, frail, or disabled live in a skilled nursing facility; a decade ago, 60 percent of them did. The difference is that today nearly three out of four of them live in assisted living facilities or at home with the help of nurses, attendants and case managers provided by government-paid health plans. Actuaries report that an Arizonan nursing home costs the state $5,400 a month just for custodial care, while care for a patient living at home costs only $1400. Keeping people out of nursing homes has resulted in a reasonable profit for insurance companies, who report that they make two to four percent profit in Arizona. In addition, Arizonans eligible for Medicare and Medicaid who enrolled under one managed care group had a 31 percent lower rate of hospitalization than those in traditional fee-for-service, they used emergency departments less often, and when they were hospitalized, they spent fewer days and were readmitted less often, according to the testimony of Tom Betlach, director of AHCCS before a Senate subcommittee.

Although critics of managed care say incentives for companies to keep the fee and withhold care are too great, in Arizona, patients report that they are satisfied with the care they receive from their primary care doctor and the nurse and office staff who call to check on them regularly. Case managers visit clients every three months as part of a coordinated and concerted effort to keep patients out of nursing homes and emergency rooms, Varney said. Those who receive visits from health plan case managers in their home say that the case managers are like “guardian angels.” Patients around the state report that they have just one number to call to get a doctor’s appointment, a prescription filled, durable medical equipment, or help with doing basic necessities such as laundry and meals, according to the article.